The Indian stock markets showed mixed performance on February 18, as both the Sensex and Nifty 50 indices resumed their downward trajectory after a brief hiatus, although they managed to recover some losses by the end of the trading session.
The broader market, however, continued to underperform, with the Nifty Midcap 100 and Smallcap 100 indices closing lower.
Both key indices, Sensex and Nifty 50, started the day in negative territory, with early losses reaching as much as 0.70%. However, by mid-session, the markets showed signs of recovery, and the positive momentum continued until the close.
The Nifty 50 recovered 137 points during the day to close at 22,945 points, marking a minor decline of 0.06% compared to the previous close. Meanwhile, the Sensex gained 491 points from its low and ended the session with a marginal gain of 0.04%, closing at 75,967 points.
The broader market also rebounded sharply from the day’s lows but underperformed the benchmark indices. The Nifty Midcap 100 concluded the session with a drop of 0.20%, settling at 49,751 points, while the Nifty Smallcap 100 index finished the session at 15,127, down 1.59% compared to Monday’s closing level.
The market's recovery can be attributed to the ongoing selling pressure in previous sessions, which pushed several stocks into oversold territory, providing opportunities for a technical rebound.
This rebound suggests that investors are adopting a "buy-on-dips" strategy, taking advantage of the corrections in stock prices.
Despite the positive movement on the day, market sentiment remains cautious, as investors continue to assess global factors such as trade tensions and inflationary pressures.
The ongoing trade dispute between the United States and China has raised concerns about the potential impact on global growth and the Indian economy.
Reports indicate that US President Donald Trump plans to impose tariffs on various countries, including China, Mexico, and Canada, with some suggesting that tariffs may even extend to automobiles.
Such measures have triggered fears of retaliatory actions and an escalation of trade tensions, which could lead to slower economic growth worldwide.
The uncertainty surrounding these global trade developments has caused jittery investors to closely monitor any new signals from the Federal Reserve regarding the impact of tariffs on the economy.
Market participants are awaiting the release of the Federal Reserve's January meeting minutes, which may provide further insight into policymakers' views on the potential economic risks posed by a broader trade war.
Vinod Nair, the Head of Research at Geojit Financial Services, explained that the domestic market is currently experiencing a mix of profit-booking and bottom-fishing.
Foreign institutional investors (FIIs) have been pulling out funds from the Indian market, contributing to the overall sentiment of uncertainty. This, combined with the pressure on the Indian rupee (INR), has led to caution among investors.
Moreover, India’s widening trade deficit, driven by rising imports due to the depreciating domestic currency and surging commodity prices, has added to the concerns.
Despite the deep correction in stock prices, investors are still looking for bargain-hunting opportunities, but modest earnings growth and global uncertainties are holding back a significant rally in the market.
Several stocks from the Sensex pack were among the biggest laggards, including IndusInd Bank, Mahindra & Mahindra, UltraTech Cement, Hindustan Unilever, and Tata Consultancy Services.
Despite the downward trend in India’s stock market, there was some positive movement in Asian markets. Seoul, Tokyo, and Hong Kong ended in the positive, while Shanghai closed lower.
European markets were mostly lower, and the US markets were closed for the day in observance of ‘President’s Day’. Meanwhile, the global oil benchmark, Brent crude, saw a 0.73 pc increase, reaching USD 75.77 per barrel.
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